Iraqi dictator Saddam Hussein's successful invasion of Kuwait last week was facilitated by billions of dollars in arms purchases from many of the countries that condemned the invasion this week, according to U.S. intelligence and diplomatic sources.

Iraq has been the world's leading importer of major weapons for much of the last decade, a role that was actively encouraged by both Western and communist nations seeking profits and hoping to bolster an opponent of the revolutionary Islamic regime in Iran. Many of these arms sales occurred during the eight-year Iran-Iraq conflict, but officials say they were continued with little regard to the consequences after the war's conclusion in 1988.

The United States has supplied virtually no modern armaments to Iraq, saying it feared potential destabilization of the region. Throughout the 1980s, however, Washington privately lent political support to arms sales by the Soviet Union, France and China that produced powerful Iraqi forces capable of wide-ranging military action, diplomatic sources say.

Iraq's current army of roughly a million men, backed by 5,500 tanks, 3,500 artillery pieces and 513 combat aircraft, is now considerably larger than the armies of any of its neighbors, including Iran, Syria and Turkey. Although considered inferior in any match against Israel or a combined U.S.-Saudi military force, Iraq's concentration of armored forces is capable of inflicting major damage on vital oil installations in the region and causing heavy casualties, experts in the field say.

Iraq bought more than $34 billion in weapons in 1983-88, according to U.S. intelligence agencies. The principal selling nations "all saw it as a big money earner," according to former assistant secretary of state Richard Murphy.

The Soviet Union, which last Friday joined the United States in calling for a worldwide arms embargo against Iraq, is estimated to have provided nearly half of that $34 billion in arms in exchange for needed foreign currency -- a circumstance that explains why Soviet Foreign Minister Eduard Shevardnadze said Moscow had reached a "difficult decision."

The Scud-B, an inaccurate surface-to-surface missile, is considered the most notorious weapon supplied to Iraq by the Soviets, having been steadily improved by the Iraqis with help from private Western engineers and used in bombardments to strike terror in Iranian cities. "It's a potent demonstration of what a dedicated country with lots of {financial} capital can do to develop an advanced military capability," despite intermittent Western and Soviet efforts to restrict missile technology, said Brookings Institution specialist Janne Nolan.

France, which yesterday halted all trade with Iraq, is estimated by the Central Intelligence Agency and the Defense Intelligence Agency to have been the second-largest Iraqi arms supplier, amounting to roughly 16 percent of the total sales through 1987. Included in France's shipments were more than 100 Mirage F-1 fighter aircraft, the most sophisticated in Baghdad's arsenal. Iraqi pilots and technicians received special military training in the deal.

In the mid-1980s, Iraq, finding itself paying top dollar on the open arms market and requiring spare parts faster than it could acquire them, obtained the assistance of East European nations in establishing its own defense industry. Czechoslovakia, Bulgaria, Yugoslavia and Poland sent technicians and helped equip factories that could produce small arms and ammunition, light artillery and armored vehicles.

"For Czechoslovakia, especially, it helped disguise the fact that these people {Eastern Europe} weren't making much else that the world would pay hard currency for," said David Isby, the author of a recent book on Soviet and East European military affairs.

Iraq was a lucrative customer because many of its arms purchases were underwritten by Saudi Arabia and, of course, Kuwait, according to arms specialists.

Many of the Soviet- and East Bloc-built T-72 tanks purchased by the Iraqis were unloaded at a special dock at Kuwait City, then transported to Iraq, which could have contributed to the Kuwaitis' shock when the tanks reappeared last week. Kuwait had also long provided overflight rights to Iraqi military aircraft and refueling facilities for Iraqi helicopters.

Murphy, an important State Department policy-maker on Mideast affairs from 1983 to 1989, said, "We weren't counseling the Soviets or the French to watch out" then for eventual aggressive Iraqi military action. "I don't think we thought much about . . . {the Iraqi military force} in terms of the future" due to a widespread belief that Baghdad's economy had been seriously undermined by the Iranian conflict and could not recover for "a long time."

Experts said last week that Iraq's need for additional capital weighed heavily in Saddam's decision to seize control of wealthy Kuwait.

Geoffrey Kemp, the senior director for Near East and South Asian matters for the National Security Council from 1981 to 1984, said "we had a very distinct tilt towards Iraq" in its conflict with Iran and "did not raise a finger when the French, the Soviets, or the Chinese supplied arms."

Kemp said many specialists anticipated that Iraq would "pause and begin to focus on its economic development" after the war. But Baghdad demobilized only a small portion of its forces, and continued receiving substantial arms shipments under contracts signed years earlier.

With unauthorized assistance from privately employed Western engineers, Iraq also turned its attention to developing ballistic missiles and nuclear bombs. Nolan and Leonard Spector, a Carnegie Endowment specialist on nuclear proliferation, say completion of an arsenal of these weapons is still years away.

But Saddam is estimated to have access to hundreds of chemical artillery shells produced at facilities constructed near the end of Iran-Iraq war. U.S. intelligence sources say that none have been moved into Kuwait, although Iraqi troops have been deployed there with gear needed to decontaminate soldiers and vehicles after a chemical attack.

Staff writer Benjamin Weiser contributed to this report.